The Firm: Core groups do not necessarily fit the stereotype in the movies, and that's reason enough to study them

BACK OF THE BOOK

No matter what kind of organisation you work for, you too have probably seen and been affected by it: the top management coterie. It makes all the key decisions, sets the organisational culture, makes and unmakes careers... in other words, it is the organisation. It's a reality that all of us live and deal with every day. But it has taken Art Kleiner to drive it home with an engaging book of thought-provoking simplicity. Kleiner's premise: every organisation, big or small, government or private, has a "core group" and no matter what the organisation's declared mission (Customer First, Shareholder Value), its actual objective is to cater to this group's interests. When an organisation provides free air travel for the CEO's mother in his employment contract, it knows that it is not serving its stakeholder but a constituency that really matters, the core group.

It was a core group that led investors and employees at Enron down the path of perdition; and it was a core group that let ethics get compromised at Boeing. At the same time, it's also a core group that has made Toyota-or GE, for that matter-what it is today. But Kleiner, who was the editorial director of Peter Senge's best-selling Fifth Discipline series, isn't here to denounce the core group phenomenon as evil. Rather, he wants people to recognise core groups for what they are, and the fact that to influence the organisation, they must first influence the core group. And he doesn't mean it in a negative way.

Who Really Matters: The Core Group By Art Kleiner Nicholas Brealey Price: Rs 957 PP: 277

In fact, if anything, Kleiner is saying that because core groups are so powerful, they have a special responsibility: of employing their power and privilege not just for their own good but for the good of those who may not be in positions of power, but are nonetheless critical to the organisation's success. And by offering a perceptive guide to the workings of a core group, Kleiner also shifts the onus of creating a successful one as much onto non-core employees as shareholders.

Where Kleiner stumbles, if one could call it that, is in explaining why one core group works and another doesn't-despite it being such an effective concept. But he does tell you what he thinks will make core groups work better: a new model of corporate governance, "one that recognises the primacy of Core Groups while constraining them from abuses of power". The solution, Kleiner ventures, lies in putting together a board (of directors) that cares "not just about the share price but the reputation, integrity, and knowledge of the organisation". His theory: "As the board becomes more conscious, so does the Core Group, and as the Core Group becomes more conscious, awareness ripples out into the organisation."

Kleiner's solution is simplistic at best... but has anybody got better ideas? We all know that rules work only to an extent. Beyond that point, good governance boils down to the values of the people who make up the core group. Organisations have to keep at becoming great organisations (as Jim Collins calls them). And the only thing that can inspire them to do so is not shareholder or societal pressure, but basic human goodness.

The Roaring Nineties By Joseph Stiglitz Penguin Price: Rs 1,076 PP: 389

Don't miss this book's subtitle: Seeds Of Destruction. Is it a mea culpa? Is it a confession to the Clinton Administration's role in the big bust that came after the big boom?

That depends on what you mean by 'confession'. What Joseph Stiglitz, Nobel winner, Columbia professor and Clinton economic aide, does do is return to his old academic self (the info-asymmetry-worried Keynesian self) in reviewing the New Democrat project of Third Way economics. His conclusion: Clinton struck his big-versus-small government 'balance' far too close to the market. Too much book balancing, greed-fueling and deregulation. Too little social compassion, bubble deflation and market-failure addressal.

To Stiglitz, it follows from info-asymmetry theory that "unfettered markets, rampant with conflicts of interest, can lead to inefficiency". 'Market fundamentalism', he rages, has hurt the whole world. "The US focused so much on its own economic mythology..." in selling its brand of globalization.

Er, mythology? The 'hero myth', for instance; even Alan Greenspan is now accepted as a fallible mortal. Stiglitz also takes swipes at the 'invisible hand' that's supposed to guide the market to everyone's good. "One of the reasons that the invisible hand may be invisible," he quips, "is that it is simply not there."

Hey-that sounds like lapsing into the old sort of thing that would rouse Democrats but fail to better Republican attempts at economic stimulation, let alone strike Third Way success. Face it: the Clinton balance worked fine, actually-almost. The one big extra a New Democrat would need is general luck.

Double-digit Growth
By Michael Treacy
Portfolio
Price: Rs 1,026
PP: 224
The reason that companies fail to grow in double digits, says this management consultant, is that they are in denial. Or resigned to fate. Take charge, he says, get truly market aggressive. Here's how to.

Sun Tzu On Investing
By Curtis J. Montgomery
John Wiley
Price: Rs 1,138
PP: 279
Can ancient China's philosophies drive your investment strategy? Montgomery, an investment advisor, sure thinks so. Use intelligence, maximise your advantage... the Art Of War, as applied to modern financial markets.